22.03.2013The ex-President of Moldova, Chairman of the Communist Party MP Vladimir Voronin says he doesn’t really see a particular need for holding consultations with the Liberal Democratic Party to launch the procedure of discharging Parliament Speaker Marian Lupu.

It looks as though bright and victorious hopes entertained lately by Moldovan Government as regards the ‘unblocking’ of outside financing may be clouded by the World Bank’s hesitance over the release of its first $10-mln SAC-III installment.

To do justice to the Government and the National Bank, they did all they could to ‘defrost’ the process after nearly two years. For Moldova, cooperation with the World Bank and the IMF is vital in a sense that it facilitates market reforms and allows receiving financial aid on concessionary terms. It also means that in the near future, the National Bank might be able, on certain conditions, to take out loans with annual interest rate of 0.5-0.75% and, most of all, use these funds for as long as 30-40 years.

By 2002, the IMF was principally prepared to resume lending operations with Moldova guided by the conclusions reached by its missions that came here every two-three years. This year, the Fund put it clearly to the Moldovan Government that the final decision on this topic rested with the WB Board of Directors. In late June, the World Bank decided in our favor and a month later, the IMF followed suit. The latter, by now, has already carried out its promise and provided $12-mln tranche.

As to the WB money, there are some difficulties emerged. The expert group that arrived in Chisinau in late July left the capital with a ‘certain’ opinion that now appears to be not in favor of the Moldovan Government.

The unofficial sources indicate that currently there are at least three major points of discord between the Tarlev’s Government and the World Bank.

Firstly, the WB experts insist on implementing ANRE proposal regarding electricity tariff upgrade. In accord with the acquisition contracts of RED Nord, Centru and RE Chisinau, after two years of operation, Union Fenosa (UF) was to develop new base tariff reflecting real costs of electricity supply. The UF has now produced its calculations showing that the new tariff should be set at least at 0.8 lei per kWh. Simultaneously, the company is prepared to introduce the so-called social tariff for low-income customers, assuming that those who consume no more than 50 kWh per month can pay 61 bani per kWh. In ANRE’s view, the tariff should be set at 75.

Secondly, the WB firmly recommends that the Government speed up privatization of the remaining two public electricity distribution enterprises in the north. Its experts disapproved of the ANRE’s [populist as they put it] decision to allow the downgrade of their tariffs in the circumstances when both enterprises are heavily in debts. With this regard, WB suggested that privatization consultant be found for them, as soon as possible.

Thirdly, the Bank is prepared to issue $10-mln tranche provided that telecommunication tariffs have been revised. The international rates currently applied by Moldtelecom [national phone operator] are so high that it allows it to keep the local ones relatively low. The position of the WB is such that the international rates should go down, whereas the local rates should go up.

While in Chisinau, members of the World Bank’s mission refrained from making any public comments. It was expected that later, they would release a summarizing statement.

For now, however, the Government ‘kick its heels’ in anticipation of the WB’s final judgment. Unlike the money from IMF, that arrived last week and sufficiently replenished NB’s hard currency reserve, the World Bank’s money is of much more interest for the Government, for it can be used to top up the public purse.

It goes without saying that getting this chunk at this stage is something this Government would be more than happy to do, because unblocking external financing isn’t just a mere idea without tangible resource in its hand. For the time being, however, in the absence of much expected $10 mln, all loud statements about ‘unblocking’ sound evasive.

Clearly, the Government now has reasons to ponder over the quality of its relationship with the IMF and the WB, especially in time when the subject of Moldovan debt restructuring has been put on the Paris Club agenda. Good relations with the both are just as important for Moldova’s Eurobond redemption, which schedule is due to be approved this autumn.